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Internet World: AOL boss upbeat

The Internet revolution is alive and kicking and "has never missed a beat," proclaimed AOL Time Warner chief operating officer Bob Pittman in a relentlessly upbeat keynote speech at the start of the New York Internet World conference.

The Internet has reached a critical mass and companies can begin cashing in on the subscriber bases they've acquired, Pittman said.

Pittman deployed every hue in PowerPoint's palette to illustrate how AOL Time Warner plans to sell additional services and products to its current internet and broadband customers.

Add in an array of new services - for example, $20 for a monthly music subscription, $15 for games, $10 for interactive television, $35 for a long-distance IP (Internet Protocol) telephony service - and you can significantly increase the per-user revenue derived from your subscribers, Pittman said.

Even in financially-strapped times, consumers will pay for such services because they see them as enhancements of processes and products for which they're already accustomed to paying, Pittman said.

In the near future, the Internet will move beyond the PC, and data connections will be as prevalent as phone jacks, he maintained. Companies can best capitalise on that ubiquity by embedding network functionality into devices with which consumers are already familiar, he said.

For example, a customer could replace his or her stereo with a device that looks like a typical CD player but also taps into an Internet connection to offer music from a vast online database of tunes - for a monthly fee, of course.

Pittman never strayed from his prepared script and slide show during the speech, making no reference to last week's surprise announcement by AOL Time Warner chief executive Gerald Levin that he plans to retire in May 2002

Pittman also glossed over much of the gloom that's surrounded both the technology and media industries in 2001. The sharp decline in advertising spending - which AOL Time Warner executives cited as a key factor behind lower-than-expected revenue in this year's second quarter and a widening net loss in the third - is "one of those things that you don't worry about, because that's just the cycle," Pittman said. "The good news is that ad spending always comes back."

AOL's slowing subscriber base growth is also not a problem, according to Pittman, because the real money is in marketing to those subscribers. E-commerce is taking off, he said: AOL's user spending online has tripled since 1999.

"When you look at the statistics on consumer spending online, this doesn't look like a recession. Where the consumer is spending, the Internet revolution has never slowed," Pittman said. "Every other piece of the Internet (aside from advertising) is moving forward as if nothing bad were happening in the economy, and what other industry can you say that about?"

Meanwhile, the music industry is poised for a growth spurt like the one it enjoyed in the mid-1980s, when MTV and CDs drove sales to record highs, Pittman predicted.

Twenty years ago, the music industry "was in the doldrums" - much like the industry today, he said. "I think we're at exactly the same point now, and the Internet will be major promotional tool for the music industry. Electronic delivery of music will be the equivalent of CDs."

Delegates' reactions to Pittman's speech were mixed, with some hailing his customer-centric approach and others questioning his bullish predictions.

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